The Difference Between Sourcing, Purchasing, and Procuring-to-Pay​

One of the three common processing scenarios may feel more relevant to your organization than the others. But truth be told, your organization is involved with all of them.

One of the three common processing scenarios may feel more relevant to your organization than the others. But truth be told, your organization is involved with all of them. How? In essence, we are buyers that procure resources, whether they are physical or virtual. We then go ahead and process them into products or services.

The three common processing scenarios we’re talking about:

  1. Source-to-pay
  2. Purchase-to-pay
  3. Procure-to-pay

Here’s how. In essence, we are buyers that procure resources, whether they are physical or virtual. We then go ahead and process them into products or services.

From here, we become sellers that ultimately want to get paid for our services and products.

So while our B2B processes may vary in size and complexity, they are essentially the same.  So what is the definition of these three terms? And how does it fit in the B2B Supply Chain?

Source-To-Pay

Source-to-Pay is the process of obtaining raw materials or components necessary to manufacture a product or provide a service and pay for products purchased from sellers or merchants. Typically a term used with manufacturers. Think Bill Of Materials, Logistics, etc.

Source-to-Pay relies on tech, big data as well as digital networks to enable procurement efficiency. So, instead of looking at the procurement process as a series of unrelated tasks, the source-to-pay method is integrated, allowing companies to purchase across different departments while also improving performance, spend analysis and overall business value.

Organizations that adopt a source-to-pay platform ultimately witness higher sourcing savings due to increased visibility into the procurement process. These organizations also have better-negotiating pricing power as well as more accurate forecasting.

Purchase-To-Pay

Purchase-to-pay is an integrated system that fully automates the goods and services purchasing process for a business.

The purchase-to-pay process enables pre-negotiated contracts, better communication with vendors, reduced overall supply chain and inventory costs, improved operational performance, improved financial decisions and overall efficiency,

Note: the purchase-to-pay process does not intrinsically include the Account Payable department or integrates with budgets or cost center.

Procure-To-Pay

Procure-to-pay is a term used in the software industry to designate a specific subdivision of the procurement process.

The P2P process involves integrating purchasing and accounts payable (AP) systems to create overall better efficiency within the procurement process.

This process exists within a more extensive procurement management process and typically involves the following:

  • Selection of goods and services
  • Carrying out compliance and order
  • Receiving
  • Invoicing
  • Payment

The procure-to-pay process can help businesses and organizations purchase from preferred suppliers at already negotiated prices without manual paperwork and spreadsheet headaches, ultimately strengthening compliance and control over vendors, regulations, buyers, contracts, and accounts payable.

Vurbis Procure-2-Pay Solutions

Vurbis Solutions can be integrated into any part of the procure-to-pay process through a non-invasive approach. What does this mean? It just means we eliminate the need to change any existing code or processes on both the supplier and buyer side.

To get started with Vurbis today, or to learn more, contact us.